Hankook Tire to cut workforce at fire-hit Daejeon plant

Hankook Tire & Technology Co., South Korea’s largest tire maker, will cut its workforce at the fire-hit production complex in Daejeon through redeployment and voluntary retirement, a month after a blaze completely destroyed one of the two plants in the city.

The job restructuring will affect those who have worked for more than 10 years at the manufacturing lines among its 219 redundancies, according to people familiar with the matter on Thursday.

Hankook Tire will let go of some of them through voluntary retirement.

Another 58 workers, set to retire under the age limit, are excluded from the redundancy list, while the remaining 546 employees will be transferred to other domestic and overseas plants.

Most of its employees have been on furlough and paid 70% of their basic salaries.

Hankook Tire on Wednesday notified its employees in Daejeon of the job restructuring plan.

The blaze broke out on March 12 and burned down the second plant at the Daejeon complex. It brought all of Hankook Tire’s production lines there to a complete stop.

The damage was so heavy that the company decided not to reconstruct the destroyed facility.

Among the 546 employees set to be redeployed, 213 will be transferred to the first plant in Daejeon; 265 to facilities in Geumsan, about 25 kilometers south of Daejeon; and the remaining 68 workers to factories in Tennessee and Hungary.

After the reshuffle is complete, the tire maker will significantly boost the first plant’s operating rate in Daejeon, taking over some of the manufacturing lines at the fire-hit second factory.

Before the fire, the Daejeon complex had produced 40,000 tires per day and 19 million tires annually. It accounted for half of Hankook Tire’s domestic production, with the other half manufactured at the Geumsan factory.

The two Daejeon plants had shipped 65% of their products abroad. At home, Hyundai Motor Co. and Kia Corp. are its major customers, along with the South Korean operation of General Motors Co.

The damage of the March fire was not booked in its first-quarter results because the exact loss size has not yet been confirmed.

Instead, the January-March earnings were lifted by falling seaborne freight rates and a rise in tire prices. 

Its first-quarter operating profit is estimated at 199.3 billion won ($150 million), up 58.1% from a year earlier, according to a consensus forecast by brokerage companies.

Sales are forecast to rise 12.6% on-year to 2.02 trillion won.

Write to Il-Gue Kim and Sung-Soo Bae at Black0419@hankyung.com

Yeonhee Kim edited this article.